Financial illiteracy costing UK £3.4bn annually

Financial illiteracy is costing Britons some £3.4 billion a year.

This is according to research carried out by the Centre for Economics and Business Research for moneysavingexpert.com. It highlights how people are losing out on a lot of money because they are lacking the basic financial knowledge required.

It was found that financial education can reduce the risk of unemployment by ten per cent, while it could also reduce the cost of retirement to the taxpayer by a third. Combined, these two areas could save taxpayers £2.4 billion over the course of 12 months.

In addition to this, the massive debt problem facing many Britons continues to be an issue. People are going to need advice on becoming debt free because they have not been given access to the necessary education from a young age. The study estimated £716 million could be saved a year by improving consumer awareness.

The mis-selling debacle was also found to have cost up to £244 million a year extra because people did not know what they were signing up for.

Martin Lewis from moneysavingexpert.com has called the current situation "a national disgrace" as youngsters are not receiving any education about how to manage debt.

"The cost of not equipping young people with the skills and knowledge needed to become intelligent, responsible consumers is huge compared to the trivial cost of adding financial numeracy to the maths curriculum and money awareness to personal, health and social education," he added.

Last year, an e-petition was signed by more than 118,000 people that forced parliament to debate putting financial education on the national curriculum. This motion is expected to be considered in the still-unpublished curriculum review.

Justin Tomlinson MP, chair of the All Party Parliamentary Group on Financial Education for Young People, noted the financial world is becoming increasingly complex and so they require a certain skill set to make sure they can be savvy in their choices.

By Amy White